Pharmaceutical Technologies' Impact Is $365/Head

Pharmaceutical technologies -- parasite control products, growth implants, sub-therapeutic antibiotics, ionophores and beta-agonists -- have a profound impact on the U.S. beef industry. But how much?

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Pharmaceutical technologies -- parasite control products, growth implants, sub-therapeutic antibiotics, ionophores and beta-agonists -- have a profound impact on the U.S. beef industry. But how much? Iowa State University economists estimate the direct cost savings to producers is $365/head over the lifetime of an animal.

The purpose of the study was to evaluate the overall value of pharmaceutical technologies by estimating the cost of eliminating their use in each production segment (cow-calf, stocker and feedlots). Conducted by Iowa State University economists John Lawrence and Maro Ibarburu, the project entitled, "Economic Analysis Of Pharmaceutical Technologies In Modern Beef Production," involved an economic analysis of the impact of pharmaceutical technologies on U.S. beef production using 2005 cattle prices and production input costs.

Performance data from more than 170 university studies conducted over the past 20-25 years for each of the technologies were combined using meta-analysis. And the performance results were converted to their dollar impact using budget data from 10 universities in various regions of the U.S., researchers said.

Researchers reported that selling prices for cattle would have to increase by 36% to cover the increase in costs without these technologies in the production scheme. Analyzing the results using the Food and Agricultural Policy Research Institute (FAPRI) model of U.S. agriculture to estimate the impact on beef production, price and trade if these technologies weren't available, researchers concluded there would be:

a 14% smaller calf crop on the same number of cows,

an 18% reduction in total beef produced as steer/heifer slaughter would be reduced by 16.5%,

a 181% increase in net beef imports to make up for the domestic production shortfall,

a 13.5% increase in retail beef prices, and an 8.5% decline in retail beef consumption.

While cattle prices would increase in such a scenario, the pace would not cover the added costs of production, the researchers say.

"Packers and feedlots would adjust to maintain operating margins similar to current levels resulting in lower returns to beef cow herds and a smaller feedlot and packing industry," the executive report states. And pork and poultry production would expand to fill the void for domestic and export customers.

The paper was funded by a grant from the Growth Enhancement Technology Information Taskforce, an organization of animal health company executives committed to providing educational materials to the beef industry and beef consumers. To view the entire paper, click here: www.beeftechnologies.com/pdfs/1869_getitpr_econoft.pdf